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SYDNEY, March 1 (Reuters) - Home prices across Australia'smajor cities fell for a fifth straight month in February astighter rules on investment lending chilled the once red-hotSydney market, a relief to regulators but a weight on consumerspending power.
Property consultant CoreLogic said on Thursday its index ofhome prices for the combined capital cities slipped 0.3 percentin February after it fell 0.5 percent in January.
Annual growth in prices slowed to 2.0 percent, from 3.2percent in January and 10.5 percent in the middle of 2017.
Prices in Sydney dropped 0.6 percent in February, leavingvalues down 0.5 percent on the year for the first negativereading since 2012. Values had been surging at more than 20percent a year at the peak of the boom.
Melbourne has fared better, with prices dipping 0.1 percentin February but still 6.9 percent higher for the year.
Home prices outside the major cities edged up 0.4 percent inFebruary to be 2.8 percent higher on the year. Combined, pricesacross the nation eased 0.1 percent in the month and were up 2.2percent for the year.
CoreLogic head of research Tim Lawless noted activity in thehousing market had picked up in the second half of February,with the rate of price declines slowing.
"The next couple of months should provide a much clearerpicture as to whether the falls are set to continue, or if themarket is in fact stabilising," said Lawless.
"Considering the tighter credit environment, the eventualprospect of higher interest rates and ongoing housingaffordability constraints, we expect housing market conditionswill remain sedate relative to previous years," he said.
The cooling has been very much desired by Australia's bankwatchdog. It tightened standards on investment and interest-onlyloans, leading banks to raise rates on some mortgage products.
The Reserve Bank of Australia has also been concerned thatdebt-fuelled speculation in property could ultimately hurt bothconsumers and banks.
The inexorable rise of prices in the major cities had puthomes out of the reach of many first-time buyers and had becomea political hot potato.
Yet the boom has also been a boon for household wealth, withthe government statistician estimating that housing stock isworth a cool A$6.8 trillion ($5.5 trillion) - four times thesize of annual gross domestic product.
The explosion in wealth had helped offset weakness in wages,so a sustained downturn in home prices could now act as a dragon consumer confidence and spending.